Cannabis Insurance
in Delaware
As you know, in the state of Delaware, medical cannabis is the regulation to the current date. Unless you fall into the prescribed list of symptoms that the state mandates, are you eligible? To stay afloat in a regulated climate, you must maximize all risks to ensure profitability is an easy choice.
Understanding the Delaware Cannabis Industry
Governor Jack Markell issued a legislature, called the “Delaware Medical Marijuana Act” that allowed patients aged 18 and older with a serious medical conditions to use marijuana legally. These patients are allowed to carry up to 6 ounces of marijuana.
Under this act, Delaware Medical Marijuana Program (DMMP) was founded which comes under the Delaware Department of Health and Social Services. The DMMP is responsible for regulating licenses throughout the state.
In 2012, Delaware issued its first dispensary license. The First Compassion Center opened its doors in 2015. In 2015, the Governor also passed a bill that decriminalized the possession of marijuana by adults under an ounce. However, there is still a $100 fine on it. As of 2023, bills have been issued to legalize recreational marijuana; however, voting is still pending on this.
Overview of Delaware’s Cannabis Market
The cannabis industry in Delaware ranks as the 32nd largest industry in the United States of America. Medicinal marijuana is allowed in the state, although recreational marijuana is still illegal.
However, the state has decriminalized small amounts of marijuana in possession of adults 21 and older. In 2011, Delaware became the 16th state to legalize medicinal marijuana.
Cannabis is a fairly new market in Delaware. This $40 million market deals primarily in medicinal taxes so far. As per state laws, there are no taxes on sales or medicinal marijuana.
It’s predicted that if adult-use marijuana is legalized in Delaware, then by standard rules it can have up to $24,566,974 per annum in sales tax only.
In 2019, CBD oil was legalized which created a market for it. As of now, the state only has 6 licensed dispensaries that cater to over 12000 registered patients. These compassion centers are all in one. They are responsible for manufacturing and distributing marijuana in this state.
Cannabis Laws and Regulations in Delaware
Considering this is a new industry in the state, there are strict laws from production to purchase of marijuana. At each step, a certain amount of marijuana is allowed in possession. There are multiple classes of misdemeanors to felonies depending on the amount of marijuana one possesses. Driving under the influence is a felony in the state.
Patients that are recommended by their physicians are required to carry a specific registry card to legally use medicinal marijuana.
Risks Faced by Cannabis Businesses in Delaware
Medicinal dispensaries are limited in number. They are backed up by Government-led organizations that provide a small safety net.
Cannabis is still illegal under Federal law. This is a highly regulated industry with constant changes in laws. These businesses need to be on top of industry laws at all times.
Having proper licenses, and insurance ensures that the business remains protected in the face of any risk.
The cannabis industry in Delaware ranks as the 32nd largest industry in the United States of America. Medicinal marijuana is allowed in the state, although recreational marijuana is still illegal.
However, the state has decriminalized small amounts of marijuana in possession of adults 21 and older. In 2011, Delaware became the 16th state to legalize medicinal marijuana.
Cannabis is a fairly new market in Delaware. This $40 million market deals primarily in medicinal taxes so far. As per state laws, there are no taxes on sales or medicinal marijuana.
It’s predicted that if adult-use marijuana is legalized in Delaware, then by standard rules it can have up to $24,566,974 per annum in sales tax only.
In 2019, CBD oil was legalized which created a market for it. As of now, the state only has 6 licensed dispensaries that cater to over 12000 registered patients. These compassion centers are all in one. They are responsible for manufacturing and distributing marijuana in this state.
Considering this is a new industry in the state, there are strict laws from production to purchase of marijuana. At each step, a certain amount of marijuana is allowed in possession. There are multiple classes of misdemeanors to felonies depending on the amount of marijuana one possesses. Driving under the influence is a felony in the state.
Patients that are recommended by their physicians are required to carry a specific registry card to legally use medicinal marijuana.
Medicinal dispensaries are limited in number. They are backed up by Government-led organizations that provide a small safety net.
Cannabis is still illegal under Federal law. This is a highly regulated industry with constant changes in laws. These businesses need to be on top of industry laws at all times.
Having proper licenses, and insurance ensures that the business remains protected in the face of any risk.
Types of Cannabis Insurance Coverage in Delaware
There is a wide variety of plans to choose from when it comes to you and your business. Some of these include:
Dispensary Insurance
Several risks specific to cannabis dispensaries can significantly affect the operations, due to which the state may require you to get comprehensive insurance coverage before issuing you a valid cannabis dispensary license.
Product Liability Insurance
Cannabis companies that offer tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.
Property Insurance
Property Insurance is a first-party insurance policy, reimbursing cannabis companies for direct property loss (i.e., vandalism, fire, or natural disaster). This policy covers real property, business personal property, and cannabis inventory.
D&O Insurance
Shareholders, competitors, investors, etc., can sue a cannabis company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
Workers’ Compensation Insurance
Employers are typically responsible for their medical costs and lost wages when employees sustain work-related injuries. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly
Several risks specific to cannabis dispensaries can significantly affect the operations, due to which the state may require you to get comprehensive insurance coverage before issuing you a valid cannabis dispensary license.
Cannabis companies that offer tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Products liability insurance covers defense fees and settlements, even for ungrounded claims. This coverage is particularly critical in the cannabis space as testing and manufacturing aren’t regulated at the federal level.
Property Insurance is a first-party insurance policy, reimbursing cannabis companies for direct property loss (i.e., vandalism, fire, or natural disaster). This policy covers real property, business personal property, and cannabis inventory.
Shareholders, competitors, investors, etc., can sue a cannabis company’s executives, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
Employers are typically responsible for their medical costs and lost wages when employees sustain work-related injuries. This policy covers these expenses, protecting employees while simultaneously keeping cannabis companies running smoothly
Choosing the Right Cannabis Insurance Policy in Delaware
Insuring yourself in a state with highly severe legal ramifications for even possession of cannabis is essential for any CBD farmers and cultivates in the state. For example, if you are a CBD vendor in Iowa, being insured against the risks increases the potential for success.
In the medical cannabis industry in Delaware, ensuring the success of your business involves having comprehensive protection. This entails safeguarding your business from all possible risks, such as employee-related issues and general liability concerns. It is crucial to obtain insurance coverage from a provider who understands the distinct features of the industry, which will provide you with peace of mind.
Working with an Experienced Cannabis Insurance Broker
AlphaRoot
AlphaRoot is a full service insurance brokerage that focuses exclusively in the cannabis, hemp, CBD, holistic medicine and psychedelic industries. We work with companies across the entire supply chain, from seed to sale, as well as, ancillary and capital providers. Our team is heavily invested in these industries and our goal is to help companies scale to propel them forward.
Factors to Consider When Choosing Cannabis Insurance
An insurance broker is responsible for different tasks. Hiring the wrong cannabis insurance broker will waste both your time and money. The right cannabis insurance broker will understand your values and bring the right solution to you. When looking for a reliable broker, there are some essential things to consider.
- Familiarity with this fluctuating cannabis industry.
- Do they offer risk management resources?
- Know their broker expertise.
- How many insurance carriers do they carry
- Can the broker analyze your contracts and advise you?
- You can add or ask for other things depending on your business’s status.
Common Mistakes to Avoid When Buying Cannabis Insurance
They don't purchase insurance at all
One of the biggest mistakes cannabis business owners are making is not having a policy at all. While the wrong policy is problematic, not having any coverage can be devastating to a new or even an established business. Investing in insurance covers the unforeseen and mitigates risk.
They don’t purchase cannabis specific insurance
Cannabis insurance is a very specialized niche in the insurance industry. Not all insurance agents/brokers have specific knowledge about the risks in the cannabis industry. Insuring cannabis is not like insuring your house or automobile strictly because of the nature of what you’re trying to insure and how it’s viewed by the government. If you don’t have a policy that is specific to cannabis, there may be certain exclusions based on the Schedule I status of cannabis or illegal substances.
They don’t work closely enough with a cannabis insurance specialist
Working closely with someone that knows the cannabis insurance industry is critical when choosing a policy. Cannabis business owners have to ask their agents/brokers questions, lots of questions and the broker/agent needs to be able to answer those questions.
Cultivators fail to buy crop insurance
If you are a cultivator or a grower, you rely on your cannabis crop for your income. Cannabis is agriculture, just like corn, wheat, or soy. Cultivators have to protect their income; therefore, they must have cannabis insurance and, specifically, crop insurance. Every year, wildfires ravage thousands of acres of land and crops, resulting in millions of dollars of losses for cultivators.
They don’t know what's included in their policy
As a cannabis business owner, knowledge is power. You have to be aware of the changing laws at the federal, state, and local level. You also need to know your business inside and out. Part of knowing your business is understanding what is and is not in your insurance policy. You have to know what is covered and what is excluded. There are many cannabis specific exclusions that are often overlooked. https://www.s2sinsure.com/post/cannabis-insurance-top-5-mistakes-to-avoid
Benefits of Cannabis Insurance for Delaware Businesses
AlphaRoot is licensed to provide cannabis insurance coverage throughout Delaware, not to mention across the entire US.
AlphaRoot is not in the insurance business. We’re in the business of guiding cannabis companies through the unique risks of our industry. It’s why we don’t merely broker insurance, we curate powerful cannabis risk management solutions.
Insurers looking to provide commercial cannabis insurance to this budding market should understand its rapidly shifting landscape. They must contend with legal uncertainty, evolving regulations, lack of data, and developing business practices. Insurers will also need to understand how the cannabis industry’s first and third‐party coverage needs are unique from other industries.
For medicinal marijuana, there are no such legal requirements in Delaware. The licenses are backed up by DMMP. Apart from this, these businesses should follow the general guidelines of a small business when it comes to insurance.
The following insurance is recommended to obtain if you are wanting to protect your cannabis business:
- Casualty Insurance
- Cannabis Property Insurance
- Worker’s Compensation
Again, this depends on the scope of your business.
- MSO’s
- Dispensaries
- Lab Testing
- Cultivation
- Investment Funds
- Manufacturing
- Distribution
- Technology
- Psychedelics
- Brands Service
- Providers
Cannabis Businesses
That May Need Insurance
Getting a Quote for Cannabis Insurance in Delaware
Cannabis Insurance in Delaware
Frequently Asked Questions
Cannabis insurance can cover a range of coverages such as general liability, theft, cybercrime, property damage, D&O, and much more. If you are dealing with multiple aspects of the business like cultivation, transportation, and distribution, then you may need special coverages. From property to manufacturing, storage, and sales insurance care is provided to cover all stages of the cannabis industry.
The insurance cost depends on the scope of the business but generally ranges from a few hundred dollars to tens of thousands of dollars depending on your requirements. They are not the cheapest, but they do provide great value to the business.
Insurance with premiums costs a lot more than basic and general insurance. Companies can contact insurance agents to get quotes based on the needs of their company.
There are no such laws for cannabis insurance in Delaware. Businesses can follow insurance laws for small organizations. Common insurances like general liability, auto and property laws as well as workers’ compensation should be good enough and recommended for any sort of business.
Like all insurance claims, you need to use your insurance company for any unfortunate scenario. They will be able to help you with the whole process. For a claim to be authenticated, you need to make sure you have enough proof and documentary evidence to support your claim. Read up on your coverage limits and go through the paperwork before signing anything. Get professional help from your lawyer or insurance agent if needed.